Corn Commentary - Just My Opinion

The failure to sustain contract lows after Fridays bearishly construed USDA report, a continued weak US Dollar, fears that the Argentine corn crop could be cut due to droughty conditions in the southern 1/3 of the country, Brazil contemplating the import of US ethanol and a spec trade that is considered to be too short all worked together to prompt one of the better short covering rallies we have seen in some time on Wednesday. US wheat futures rallying from recent interim lows added to the better price action.

Interior cash corn markets continue to show a firm bias mostly from slow producer movement. Processors show the best bids followed by river locations involved for export. The Gulf basis continues to grind higher; the advertised Gulf basis is the best that I have seen in some time (were talking months here). Needless to say corn spreads were working better as well; not only within the current crop year but old crop vs. new crop as well. Basis levels will continue to stay firm until the US producer starts to sell. Today was the first step in that direction.

Fridays bearishly construed USDA report gave us a new contract low by 1 cent. Tuesdays price action came within a cent of that low. The failure to sustain bearish price action into Tuesdays close prompted some short covering. That short covering followed through on Wednesday. This type of price action is telling me that we have gone low enough for now given what we know. The unknowns that remain are the 2nd season Brazilian corn crop and the development of Argentinas corn crop especially in the southern 1/3 of the country. Immediate hurdles on the upside for March corn are $3.55-$3.56 followed by $3.60.

Daily Support & Resistance for 01/18

March Corn: $3.49 - $3.56

July Corn: $3.65 - $3.72

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